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en-usCopyright 2015 AOL, Inc. The contents of this feed are available for non-commercial use only.Blogsmith http://www.blogsmith.com/http://www.joystiq.com/2014/02/12/38-studios-settlement-bill-clears-rhode-island-house-of-reps/http://www.joystiq.com/2014/02/12/38-studios-settlement-bill-clears-rhode-island-house-of-reps/http://www.joystiq.com/2014/02/12/38-studios-settlement-bill-clears-rhode-island-house-of-reps/#comments
A bill to promote out-of-court settlements for lawsuits over the collapse of Curt Schilling's 38 Studios has passed through the Rhode Island House of Representatives this week. The bill, which passed in a vote of 53-16, would protect defendants who settle from lawsuits filed by co-defendants over damages those co-defendants are found liable for.

In layman's terms, the bill encourages settlements and provides a legal buffer: If a 38 Studios official settles with the state, they will not be able to seek those due damages from any other 38 Studios official tied up in legal proceedings. Now all that's left is for Governor Lincoln Chafee to sign off on the bill before it becomes law.

Another bill introduced earlier this month proposes the state of Rhode Island default on the $75 million loan it provided 38 Studios. Defaulting on the loan would get Rhode Island off the hook for a $12.5 million loan payment due later this year as part of the debt left behind by 38 Studios. Last year, a similar bill proposing the state default on the loan failed to gather momentum.

The EDC's board of directors has agreed to pay $84,939 for a year of access to software from Salesforce. The related press release states the new system will help "maintain an accurate, reliable database of companies, improve response times to client requests" and "provide the ability to implement and track performance."

The EDC's software plans follow the US Securities and Exchange Commission's investigation of the group's loan to 38 Studios, which Rhode Island taxpayers have already begun repaying.

Permalink | Email this | Comments]]>38-studiosrhode-islandrhode-island-economic-development-corporationriedcSat, 02 Nov 2013 20:30:00 ESThttp://www.joystiq.com/2013/09/11/sec-investigating-rhode-islands-38-studios-deal/http://www.joystiq.com/2013/09/11/sec-investigating-rhode-islands-38-studios-deal/http://www.joystiq.com/2013/09/11/sec-investigating-rhode-islands-38-studios-deal/#comments
The 38 Studios epilogue continues with the U.S. Securities and Exchange Commission investigating the $75-million loan provided by the state of Rhode Island to the defunct studio. WPRI reports the SEC probe is examining the taxpayer-backed loan the R.I. Economic Development Corporation (EDC) gave to former Red Sox pitcher Curt Schilling's failed operation.

Neither the SEC nor EDC would comment on the specifics of the investigation. EDC spokesperson Melissa Czerwein told WPRI that lawyers were retained to deal with the SEC inquiry and the organization won't "discuss ongoing matters related to 38 Studios and maintains a level of confidentiality as requested by the SEC."

Rhode Island taxpayers have begun paying back the loan, which Governor Lincoln Chafee (who inherited the debacle from the previous administration) said the State had a "moral obligation" to do. To the best of our knowledge, Rhode Island continues to hold on the Amalur intellectual property.

Permalink | Email this | Comments]]>38-studiosrhode-islandrhode-island-economic-development-corporationriedcSECsecurities-and-exchange-commissionWed, 11 Sep 2013 12:00:00 ESThttp://www.joystiq.com/2013/05/31/rhode-island-holding-public-hearings-over-38-studios-exploring/http://www.joystiq.com/2013/05/31/rhode-island-holding-public-hearings-over-38-studios-exploring/http://www.joystiq.com/2013/05/31/rhode-island-holding-public-hearings-over-38-studios-exploring/#comments
The story of 38 Studios as a video game developer is long over, but the financial fallout from its $75 million in taxpayer-backed loans continues in the state of Rhode Island. The Providence Journal reports two developments this week, as the state will shortly begin a public hearing process over the debacle and consider whether it will pay back the loan.

House Oversight Committee Chairman Michael J. Marcello said the state will launch the hearing process shortly based on the "thousands of pages" of documents it received this week, in response to a public information request made over a month ago.

The committee will focus on two issues: Did the state properly retain an independent, third party to monitor and assess 38 Studios' financial standing? And what happens if the state decides not to pay the loan, which amounts to nearly $113 million after interest.

Governor Lincoln Chafee's administration believes the state, which has no legal necessity to pay the loan, does have a "moral obligation." Chafee's proposed state budget (which needs to be approved by July 1) does factor in an initial $2.5 million payment, with $12.5 million paid out over the next seven years.

Permalink | Email this | Comments]]>38-studioscurt-schillingpcrhode-islandrhode-island-economic-development-corporationMon, 20 May 2013 19:30:00 ESThttp://www.joystiq.com/2013/03/04/schilling-asks-judge-to-throw-out-lawsuit-over-75-million-loan/http://www.joystiq.com/2013/03/04/schilling-asks-judge-to-throw-out-lawsuit-over-75-million-loan/http://www.joystiq.com/2013/03/04/schilling-asks-judge-to-throw-out-lawsuit-over-75-million-loan/#commentsCurt Schilling, founder of defunct 38 Studios, asked a judge to throw out The Rhode Island Economic Development Corporation's lawsuit that alleges Schilling and studio executives misled the agency in securing a $75 million taxpayer-guaranteed loan. The lawsuit accuses Schilling and his crew of fraud, racketeering and conspiracy.

Schilling's lawyers filed documents on Friday to Superior Court Judge Michael Silverstein, asking him to throw out the lawsuit. The documents claim Schilling and other board members repeatedly disclosed 38 Studios' financial situation to the EDC, and that the EDC knew $75 million wouldn't be enough to finish its MMO, Project Copernicus.

"Given the EDC's admissions concerning 38 Studios' disclosures to the EDC's executives, attorneys and financial advisor, it is impossible for the EDC simultaneously to claim that the 38 Studios defendants supposedly defrauded the EDC," the filing reads.

Permalink | Email this | Comments]]>38-studioscurt-schillingedclawsuitrhode-islandrhode-island-economic-development-corporationMon, 04 Mar 2013 19:15:00 ESThttp://www.joystiq.com/2012/12/31/events-2012-38-studios/http://www.joystiq.com/2012/12/31/events-2012-38-studios/http://www.joystiq.com/2012/12/31/events-2012-38-studios/#comments38 Studios was the video game story of the year with mainstream appeal. Much of that mainstream appeal had to do with Curt Schilling, the former baseball player for the Boston Red Sox who went on to found his own video game studio. But the story was way more than Schilling.

The state of Rhode Island and its taxpayers were on the hook for a $75 million loan given to the studio as part of an economic development deal. As the video game industry in the US works toward tax incentives to stop the slow brain drain to the north, the very public collapse of 38 Studios and its relationship to the government is exactly what those working on industry tax breaks - especially in neighboring Massachusetts - did not need.

38 Studio is a saga, but we've selected a couple pieces to highlight here that took place in the middle of the studio's collapse and its aftermath.

"I know you work hard for your paychecks, and for your tax dollars to be squandered is unacceptable. The board's legal action was taken to rectify a grave injustice put upon the people of Rhode Island," said Governor Lincoln Chafee in a prepared two-and-a-half-minute statement posted on YouTube (found after the break, with text transcript).

The full complaint [PDF] alleges the former EDC board never ordered an independent assessment of 38 Studios' capabilities to finish Project Copernicus before the loan was approved, even though it was to do so. It also claims Wells Fargo received nearly $500,000 "in hidden commission from 38 Studios" that weren't disclosed to the EDC board.

The recent public auction at 38 Studios' former Providence HQ grossed approximately $650,000. The auction at 38 Studios' Big Huge Games division in Maryland brought in $180,000. It's estimated 38 Studios owed $150.7 million when it declared bankruptcy, so far the state of Rhode Island has recovered about $830,000.

Update: We got in touch with Law of the Game attorney Mark Methenitis to boil down exactly what Rhode Island is seeking in the suit. We've placed his analysis after the break.

Permalink | Email this | Comments]]>38-studioscurt-schillingjennifer-macleankingdoms-of-amalur-reckoninglawsuitmicrosoftpcplaystationps3rhode-islandrhode-island-economic-development-corporationRIEDCxboxThu, 01 Nov 2012 12:50:00 ESThttp://www.joystiq.com/2012/06/14/38-studios-spouse-38-spouse/http://www.joystiq.com/2012/06/14/38-studios-spouse-38-spouse/http://www.joystiq.com/2012/06/14/38-studios-spouse-38-spouse/#commentsLate Tuesday night an email blast went to several media outlets from '38 Spouse,' offering up an inside look into the collapsed 38 Studios "through the eyes of a spouse of one of the employees." The allusions to the EA Spouse (Erin Hoffman) incident of 2004, a watershed moment in the industry regarding working conditions, gave us pause in printing the full letter. Turns out "38 Spouse" had never even heard of her predecessor.

"No, I was not aware at the time, but have now been enlightened," she told Joystiq. Although 38 Spouse has verified her identity to us, she wishes to remain anonymous to not "cause any problems" with her husband getting a new job. He remains unemployed, she said, "But there's lots of interest and we are hoping to have something soon."

"It took me some time to get over the shock to be honest. Also, I have been looking for a temporary job, since I am not sure if we are moving or not," she told us when asked why she sent the open letter. "It's been a month and I really felt that now was the time to hear a different side of this story. I wanted to explain and make people aware in any industry, not just gaming, that this kind of thing happened. These employees were not a statistic, but real people with families and they believe in what they do."

Asked who her husband blames for the situation she said, "He really doesn't blame anyone specifically as there were a lot of different reasons things weren't working."

38 Studios declared bankruptcy earlier this afternoon and Rhode Island Governor Lincoln Chafee held a press conference this afternoon to discuss the company's assets, which now belong in part to Rhode Island taxpayers.

"We have had in recent days discussions with investors that were and, to my knowledge, are discussing substational numbers, which indicate that there could be significant value to the assets," said Jonathan Savage, council to the Rhode Island Economic Development Corporation. "I can say that discussions we've had have been in the tens of millions of dollars."

"We are going to do everything possible to maximize return on our investment," declared Governor Chafee. "Taxpayers in Rhode Island can have full confidence that if there's a penny that we can get, or a nickle or a dime, we'll get it." Earlier this year, Wedbush Securities analyst Michael Pachter told us that he expected 38 Studios' IP to be worth approximately $20 million.

WPRI reports the state police, attorney general's office, US Attorney's office and the FBI will investigate 38 Studios, "both the money that came from the state as well as the money that came from Bank Rhode Island." The Providence Journal confirmed the bankruptcy this afternoon.

Schilling also said that he could lose $50 million due to the studio's failure - money which he earned as a professional baseball player, and which he later invested into 38 Studios. That money, as well as approximately $50 million of a planned $75 million loan co-signed by the state of Rhode Island, was eaten by 38's long-in-development MMO, "Project Copernicus."

38 Studios' Baltimore-based subsidiary, Big Huge Games, was working on a sequel to this year's Kingdoms of Amalur: Reckoning. The project was depending on private investment to go into production - to the tune of $35 million from an unnamed publisher - which Schilling said was pushed away by Chafee's statements.

"Curt was committed to us as a community and as people, he wanted the best possible work environment for the team he cared so much for, and as a result none of us wanted to let him down," one former 38 Studios employee, speaking under condition of anonymity, told us. "He had invested so much into us financially and personally, we were not about to betray that trust. We were not going to take the chance of speaking to the press and accidentally ruining any chances with outside investors. Unfortunately, it didn't matter if the employees spoke and ruined things with the investors as the Governor beat us to it."

Update: Governor Lincoln Chafee responded this morning to Schilling's comments in a short Q&A session with Rhode Island reporters. "As a business person, he was new at it, and so I always had some reservations," Chafee said. "I have to verify everything, I can't just take it as a leap of faith," he told one reporter asking about the alleged $35 million that 38 Studios was on the brink of acquiring to create a sequel to this year's Kingdoms of Amalur: Reckoning. "Hope springs eternal, but I won't misrepresent to the Rhode Islanders how dire the situation is," Chafee added. "I understand that being involved in this very risky industry that, when things aren't going well, there's gonna be blame. But this isn't accurate to be blaming the state in this case."

Permalink | Email this | Comments]]>38-studiosbig-huge-gamescurt-schillingkingdoms-of-amalur-reckoninglayoffslincoln-chafeeproject-copernicusrhode-islandrhode-island-economic-development-corporationTue, 29 May 2012 10:00:00 ESThttp://www.joystiq.com/2012/05/23/38-studios-employees-unpaid-since-may-1/http://www.joystiq.com/2012/05/23/38-studios-employees-unpaid-since-may-1/http://www.joystiq.com/2012/05/23/38-studios-employees-unpaid-since-may-1/#comments38 Studios employees have not been paid since May 1 and their health care will end Thursday at midnight, a source with knowledge of the situation tells Joystiq. Employees are normally paid on the first and 15th of each month.

When asked if the studio would be shutting down this week, the source could only say, "Unknown at this time. Outlook is not good."

We're informed that 38 Studios' MMO, "Project Copernicus," announced by Rhode Island Gov. Lincoln Chafee as launching in June 2013, did have that date as its internal target. However, "Whether this is realistic or not is up for debate."

Gov. Chafee said in a press conference today that he would do what he could to prevent the studio from shutting down. Will the studio still exist within a month? "I have no idea," our source replied.

Permalink | Email this | Comments]]>38-studioscurt-shillingLincoln-Chafeepcproject-copernicusrhode-islandrhode-island-economic-development-corporationWed, 23 May 2012 20:30:00 ESThttp://www.joystiq.com/2012/05/23/ri-gov-chafee-working-to-prevent-38-studios-shutdown-unaware-o/http://www.joystiq.com/2012/05/23/ri-gov-chafee-working-to-prevent-38-studios-shutdown-unaware-o/http://www.joystiq.com/2012/05/23/ri-gov-chafee-working-to-prevent-38-studios-shutdown-unaware-o/#commentsThe situation faced by troubled MMO developer 38 Studios is not improving. According to Rhode Island Governor Lincoln Chafee, the company has not received any new investment. In a sudden press conference late today, he said the studio had not received any outside investment nor any of the new tax credits it has applied for. NBC10 reports that, when asked if 38 Studios would be closing, Chafee said he would do what he could to prevent it.

WPRI reported today that CEO Jennifer MacLean removed the title of chief executive from her LinkedIn profile and listed her departure as having occurred in March. John Blakely, senior vice president of product development, also revised his LinkedIn profile to show that he left the company this month. Joystiq has also been informed of continuing layoffs at the company, and that health insurance has run out.

Permalink | Email this | Comments]]>38-studioscurt-schillingjennifer-macleanpcproject-copernicusrhode-islandrhode-island-economic-development-corporationWed, 23 May 2012 19:00:00 ESThttp://www.joystiq.com/2012/05/23/analyst-estimates-amalur-ip-worth-20-million-38-studios-employ/http://www.joystiq.com/2012/05/23/analyst-estimates-amalur-ip-worth-20-million-38-studios-employ/http://www.joystiq.com/2012/05/23/analyst-estimates-amalur-ip-worth-20-million-38-studios-employ/#commentsThe value of 38 Studios' Amalur intellectual property is estimated to be in the range of $20 million. We asked Wedbush Securities analyst Michael Pachter for his valuation following confirmation of layoffs at the studio and coverage of 38 Studios employees flocking to Turbine's recruitment drive in Providence last night.

"Nobody is buying MMOs after Star Wars fizzled. I think value is low, probably $20 million or so," Pachter said. "There is just no demand for game assets right now, as THQ proved when it tried to sell the Warhammer MMO. I think [Electronic Arts] could step in, since they are the publisher, so you might see some alternative way to get 38 some bridge financing."

"Nope - never been an announcement on that," Jeff Brown of EA corporate communications told Joystiq. "We don't have any new announcements to make regarding 38 Studios. We enjoyed working with Curt and his team on their first game, Kingdoms of Amalur: Reckoning. Like game fans all over the world, we look forward to what 38 Studios creates next."

With reports out of Providence delivering an uncertain near future for the studio, it wouldn't be surprising if publishers tried to pick up the Amalur IP for pennies on the dollar. However, with documents showing that 38 Studios put up the IP as collateral against the $75 million loan, anybody trying to pick up the IP will be negotiating with the state of Rhode Island for control of Amalur.

Permalink | Email this | Comments]]>38-studiosamalurcurt-schillingmicrosoftpcplaystationproject-copernicusps3rhode-islandrhode-island-economic-development-corporationxboxWed, 23 May 2012 10:30:00 ESThttp://www.joystiq.com/2012/05/16/rhode-island-owns-38-studios-intellectual-property/http://www.joystiq.com/2012/05/16/rhode-island-owns-38-studios-intellectual-property/http://www.joystiq.com/2012/05/16/rhode-island-owns-38-studios-intellectual-property/#commentsIf 38 Studios does shutter, beyond Rhode Island taxpayers having to pay off the $75 million bond (plus interest) through 2020, it appears the state will also own the intellectual property of the developer as a parting gift. Reviewing updated documentation released by the Rhode Island Economic Development Corporation (RIEDC) today, it appears 38 Studios put up all present and future IP by the company as collateral.

According to the documentation, 38 Studios' intellectual property rights and other collateral were pledged to the RIEDC and assigned to a trustee, which we've confirmed by pulling Uniform Commercial Code documentation. Any proceeds made from the sale of the collateral would go back to the bondholders. This covers "all rights, title and interest in any projects, including video game projects," such as Kingdoms of Amalur: Reckoning and "Project Copernicus" - the title currently in development at 38 Studios.

"Based on what information I've been able to review on the 38 Studios situation, it appears that the funds they received from the RIEDC were secured by collateral that amounts to all of 38 Studios assets, including all of their intellectual property," attorney and Law of the Game editor Mark Methenitis told Joystiq this afternoon. "That would include all the rights to Kingdoms of Amalur and any other games they may have in development, even if no information about those titles has ever reached the light of day."

Permalink | Email this | Comments]]>38-studioscurt-schillingkingdoms-of-amalur-reckoningmicrosoftpcplaystationps3Rhode-Islandrhode-island-economic-development-corporationxboxWed, 16 May 2012 16:32:00 ESThttp://www.joystiq.com/2012/05/15/38-studios-whiffed-last-loan-payment-received-nearly-50-millio/http://www.joystiq.com/2012/05/15/38-studios-whiffed-last-loan-payment-received-nearly-50-millio/http://www.joystiq.com/2012/05/15/38-studios-whiffed-last-loan-payment-received-nearly-50-millio/#commentsThe hits keep coming for ex-baseballer Curt Schillings' 38 Studios. The company reportedly missed its latest loan payment of $1.125 million to the state of Rhode Island on May 1, effectively defaulting its $75 million loan. WPRI spoke with Rhode Island House Speaker Gordon Fox who confirmed the news.

The loan's facilitator, Rhode Island's Economic Development Corporation, called an "emergency meeting" for tomorrow morning, wherein it will discuss "an unexpected occurrence that requires immediate action to protect the public regarding the 38 Studios financing." As reported earlier, if 38 Studios were to fully default on its loan obligations to investors supplying the loan via the Rhode Island government, the responsibility would fall to Rhode Island's taxpayers - to the tune of $112.6 million.

Of the $75 million borrowed by 38 Studios from the state of Rhode Island, $49.8 million was received by the studio as of March 15, WPRI reports. Given that, it seems worrisome at best that 38 Studios was unable to fulfill its recent payment of $1.125 million. 38 Studios is working on the Kingdoms of Amalur MMO - the game was originally promised for a launch ahead of 2013, when 38 Studios is set to begin paying back bondholders on its $75 million loan. It's unclear what stage its MMO is at, and 38 Studios hasn't made a public statement regarding its recent issues.